V.K.Singhal, J. - (1.) THE present writ petition has been filed against the order dated April 15, 1982, passed by the Commissioner of Income- tax under Section 264 of the Income-tax Act, 1961.
(2.) THE brief facts of the case are that the petitioner-company paid advance tax amounting to Rs. 1,79,200 under Section 210 of the Income-tax Act, 1961, as under : JUDGEMENT_404_ITR217_1996Html1.htm The assessment in respect of the assessment year 1977-78 was finalised on January 16, 1979, on an income of Rs. 2,05,090 and the tax payable was at Rs. 1,18,440. The order of the Income-tax Officer was rectified under Section 154 on April 7, 1979, and the income originally assessed was increased to Rs. 2,36,306. The tax payable thereon was Rs. 1,36,468. This order was further rectified on September 10, 1979, and on rectification the total assessable income was reduced to nil. In pursuance of that order, the assessee became entitled to refund of advance tax, as well as tax deduction at source amounting to Rs. 8,005 and tax at Rs. 12,627, which was adjusted by the Income-tax Officer out of refund for the assessment year 1978-79. The Income-tax Officer refunded the tax to the petitioner-company of Rs. 1,99,832 as under : JUDGEMENT_404_ITR217_1996Html2.htm Thereafter, the company made an application for grant of interest on the excess amount of tax deposited and refunded. The Income-tax Officer allowed the claim of the assessee in part, vide order dated March 17, 1980, and interest of Rs. 8,047 was allowed as under : JUDGEMENT_404_ITR217_1996Html3.htm Against the above order, the assessee filed a revision under Section 264 of the Income-tax Act, 1961, before the Commissioner of Income-tax where also part of the claim of the assessee was allowed and it was directed that the interest under Section 244(1A) is separately admissible with effect from January 16, 1979, up to September 10, 1979, on the amount of Rs. 1,25,427. The Commissioner of Income-tax found that while issuing refund of Rs. 44,212 at the time of completion of assessment under Section 141A, the question regarding admissibility of interest under Section 214 upon this amount has already been considered and interest of Rs. 1,222 was allowed on an amount of Rs. 9,428 since the instalment of Rs. 34,784 was deposited by the assessee much after the due date for payment of the instalment. Similarly, while allowing refund of Rs. 30,193 at the time of regular assessment, interest of Rs. 6,321 under Section 214 has already been allowed and, therefore, there is no question of granting any further interest under Section 214 on any further amount. The assessee has claimed that in accordance with the provisions of Section 214, the petitioner is entitled for the interest on the amount of Rs. 34,784 since the said amount was paid before March 31, 1977. Another contention which has been raised is that in respect of advance tax of Rs. 1,04,795 the assessee is entitled to interest from April 1, 1977, to January 15, 1979.
(3.) IN respect of the contention that the assessee is entitled for interest on the advance tax even after the due date, but within the financial year, it is submitted that the provisions of Section 214 provide for payment of simple interest at 15 per cent. per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under Sections 207 to 213, exceeds the amount of the assessed tax from the first day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by renson of the provisions of Section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment. The dispute is with regard to the payment of interest in respect of the instalment of advance tax which has been paid after the due date. By the Direct Tax Laws (Amendment) Act of 1987, a proviso has been added to Section 211 which provides that any amount paid by way of advance tax on or before the 31st day March, shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of the Act. So far as the question after April 1, 1988, is concerned, the controversy has been set at rest. It is only in respect of the period prior to April 1, 1988, that it is to be considered whether prior to this date on the amount, which has been deposited after the due date but during the financial year, the assessee can claim interest thereon. The Calcutta High Court in the case of General Fibre Dealers Ltd. v. ITO [1979] 116 ITR 40 has held that the regular assessment contemplated by Section 214, should be the assessment made by the Income-tax Officer initially or the first assessment made by the Income-tax Officer if there was no appeal therefrom, but in case there was an appeal, the order passed by the Income-tax Officer finally to give effect to the direction, if any, of the appellate authority. The Gujarat High Court in Anup Engineering Ltd. v. ITO [1984] 145 ITR 105 has dissented from the decision of the Andhra Pradesh High Court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 and the Kerala High Court in A Sethumadhavan v. CIT [1980] 122 ITR 587 and held that there is no indication in Section 214 of the Income-tax Act, 1961, that the dates of instalments of advance tax are strictly to be adhered to and, if they are not adhered to, interest will not be payable. The decision in Chandrakant Damodardas v. ITO [1980] 123 ITR 748 (Guj) was followed and it was observed that it is clear that the Legislature intended to provide that irrespective of the dates on which the instalments of advance tax are paid, interest will be payable on the excess advance tax if two conditions are satisfied : (i) the entire amount of advance tax is paid up, and (ii) it is paid up before the end of the financial year. There is no further condition that the instalments of advance tax must have been paid on or before the due dates mentioned in Section 211. Failure to pay the instalments on the due dates might involve an assessee in payment of penalty, if the other conditions for levy of penalty are satisfied, but the concept under Section 214 being totally unconnected with deprivation of interest, where penalty is incurred, the interest on excess advance tax must be paid if the two abovesaid conditions are satisfied. ;